Tuesday, March 23, 2010

Lime Energy sticks to their "less is more" motto, this time with regard to profits (LIME)


Lime Energy reported earnings a loss per share of about 26cents, inclusive of a non-cash impairment charge related to a previous acquisition. Revenues of $20.3million came in light of the $20.87million expected by Wall Street.

Guidance for the coming quarter, however, was super-ugly. The company sees revenue of about $11million, versus the $17million expected by the street.

This company first popped up on my screen as a "notable financing" situation. The manner in which companies raise money always explains a lot about the quality of the company...and in their September 2009 equity financing, it was clear that the financing and management were of very poor quality.

From today's release:
"Our Public Sector business achieved a 12.8% revenue increase over the previous year on a pro-forma basis, which is also impressive given the unintended slowdown caused by the federal stimulus program.
"The fourth quarter did mark a particularly difficult period in the year," continued Mr. Asplund. The shortfall in expected revenues was due primarily to a delay in a significant number of projects with our ESCO customers. We believe these delays are due to public sector customers waiting to see if they receive any stimulus funds which would reduce the funds needed to finance their project. We have begun to see some ARRA financed projects released as evidence by the recent announcement of our energy engineering contract with a municipality. Therefore, we remain confident this sector will contribute to our growth in 2010 and beyond but remain vigilant in aggressively managing our associated costs."

The company is seeing barely any business form the private sector, and is desperately awaiting Recovery Act money to flow out the door. And folks, these are the PRIME examples of stimulus-related, overpaid consultants who only have a business model thanks to government-mandated compliance.

On the conference call (ongoing right now), one of their new contracts announced was "energy audits" of hundreds of buildings for a municipality.

The company cites a "backlog" of $97million, to compare with 2010's expected $107million in revenue. With nothing to go on but past performance, I would call this backlog optimistic.

Shares are down about 22% after hours, as investors sell this joke of a business model.

Copyright 2010 AlphaNinja

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